Yields on gov't loans up for 5th consecutive week
At A Glance
- The national government fell short of its target in selling short-term debt papers due to banks demanding higher returns for fifth consecutive week.<br>The auction for Treasury bills (T-bills) raised only P14.26 billion out of the intended goal of P15 billion. The total bids received during the auction amounted to P23.359 billion.<br>The government raised only P4.26 billion for the 182-day securities despite total bids reaching P5.46 billion. The average interest rate for one-year T-bills increased to 6.330 percent.<br>The average rate for the benchmark 91-day IOUs rose to 6.149 percent. The government successfully sold P5 billion worth of three-month papers as planned.<br>The average yield on the 364-day T-bills increased to 6.479 percent. The government also awarded the full amount of P5 billion for the one-year securities.<br>Investors pushed for higher interest rates to align with the one-year or overnight average auction yield at 6.14 percent recently.<br>Israle-Hamas conflict and rising global oil prices also influenced the increase in rates.
The national government failed to sell its short-term debt papers as investors pushed anew for higher returns for the fifth consecutive week.
The national government fell short of raising its P15 billion target, managing to raise only P14.26 billion. The total bids received during the auction amounted to P23.359 billion.
Specifically, the government struggled to meet its intended goal for the 182-day securities, raising only P4.26 billion amid higher bid yields of P5.46 billion.
The average interest rate for the six-month T-bills rose by 12.3 basis points to 6.330 percent, compared to the previous week's rate of 6.207 percent.
Also, the average yield on the 91-day T-bills inched up by 15.9 basis points to 6.149 percent from 5.990 percent.
The government awarded the full amount of P5 billion for the three-month securities, with total demands hitting P7.80 billion.
Lastly, the average rate on the 364-day T-bills rose by 9.1 basis points to 6.479 percent from 6.388 percent.
The Treasury successfully raised P5 billion through the sale of the one-year debt papers, meeting the planned target. Total tenders for the one-year tenor reached P10.095 billion.
In contrast with the Bloomberg Valuation Service (BVAL) rates, the yield on the three-month bill was lower at 5.98 percent, while the yield on the six-month bill stood at 6.20 percent.
The average rate for the 12-month bill was also lower in the secondary market at 6.46 percent.
Banks pushed for higher yields to align with the one-year or overnight average auction yield at 6.14 percent recently, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC).
“Treasury bill auction yields also increased in recent weeks to also be better aligned with the key local policy rate at 6.25 percent,” Ricafort said in a Viber message.
The chief economist also cited the escalating Israel-Hamas conflict and higher global oil prices that could add to inflationary pressures and potential future policy rate hikes.